Reciprocity - 1776–1830

The first treaty signed by the infant republic was the Treaty of Amity and
Commerce with France in 1778. The preamble to the document stated that
equitable and permanent commercial relations between the two countries

could not be better obtained than by taking for the basis of their
agreement the most perfect equality and reciprocity, and by carefully
avoiding all those burdensome preferences which are usually sources of
debate, embarrassment, and discontent;…and by founding the
advantage of commerce solely upon reciprocal utility and the just rules
of free intercourse, reserving withal to each party the liberty of
admitting at its pleasure other nations to a participation of the same
advantages.

Writing in 1823, John Quincy Adams declared that this preamble "was
to the foundation of our commercial intercourse with the rest of mankind,
what the Declaration of Independence was to that of our internal
government. The two instruments were parts of one and the same system
matured by long and anxious deliberation of the founders of this Union in
the ever memorable Congress of 1776." To the younger Adams,
"the most perfect equality and reciprocity" constituted the
"cornerstone" for the commercial foreign policy of the
United States. And, he argued, it was the United States that first
proclaimed not only the political ideals of equality and independence but
also the "true principles of all fair commercial negotiations
between independent states."

Adams may have been indulging in a bit of nationalistic enthusiasm, but he
was generally accurate concerning the origins of the American policy of
reciprocity and the pioneering role of the United States in promoting a
liberal international commercial system. The American concept of
reciprocity was shaped by a mixture of the colonial experience and
eighteenth-century economic liberalism. During the first three-quarters of
the century, the British North American colonies made substantial gains in
international shipping. By 1776 they were already a major power engaged in
carrying not only domestic goods but also the goods of other nations. In
fact, shipping provided a major source of colonial income.

Yankee merchants were not noted for their adherence to mercantilist
restrictions on trade. They pushed into the Caribbean and the
Mediterranean and to the coasts of Africa, often violating the imperial
restrictions of France, Spain, and even Britain. Of course, they enjoyed
the privileges of the British Empire even though they did not obey the
extra colonial restrictions of the Navigation Acts. In short, the Yankee
merchants were breaking down trade barriers by various means prior to
1776, and before Adam Smith put the thoughts on paper, they were firm
believers in the liberty to "truck, barter, and exchange."
In his
Summary View of the Rights of British America
(1774), Thomas Jefferson argued that the colonists had a "natural
right" to trade freely with all parts of the world. Many of the
Founders saw the new nation as a preeminent commercial republic where
prosperity and independence would be ensured by the free flow of goods and
ships.

The ideas of English liberals and French philosophes reinforced the
commercial experience of American colonials and added new dimensions to
their concept of international commercial relations. Adam Smith summarized
many of these ideas in his book,
The Wealth of Nations
(1776), but the themes of distribution of labor among nations,
comparative advantage, and unrestricted commerce had already been
developed by various English and French thinkers. The French Physiocrats
argued that the unrestricted flow of goods among the nations would replace
power politics and war, since merchants were "citizens of the whole
world." Many of the policymakers of the new American republic were
quite familiar with these ideas. Economic liberalism in international
commerce not only coincided with their concept of the interests of the
United States, but also justified the mission of the nation to promote a
new system of international relations. Thus, the Founders viewed
reciprocity as a bargaining tool and as an integral part of a peaceful,
open world order based on equality of treatment and the free flow of goods
and ships.

These ideas were first spelled out in the Model Treaty that the
Continental Congress adopted in 1776 for purposes of negotiating with
France. John Adams drafted the treaty with the assistance of John
Dickinson, Benjamin Harrison, Robert Morris, and Benjamin Franklin. He
probably was influenced by the writings of Thomas Paine. The
latter's
Common Sense
(1776) had expressed the idea that America's "plan is
commerce, and that, well attended to, will secure us the peace and
friendship of all Europe, because it is the interest of all Europe to have
America as a free port." Adams and the other committee members
generally agreed with this proposition and believed that the principles of
the Model Treaty would ensure the independent existence of the United
States. They hoped that the offer of "perfect" commercial
reciprocity would repeal the British Navigation Acts as they affected
America, and secure French assistance without involving the nation in the
European alliance system. Adams's Model Treaty clearly defined
"perfect" reciprocity as complete equality of treatment;
France and the United States were to make no distinctions between natives
and the citizens of the other country (the doctrine of reciprocal national
treatment). This was freedom of trade in the eighteenth-century context,
which meant equality of treatment rather than elimination of all duties
and dues (the definition that developed in the nineteenth century).

The Model Treaty was a fine declaration of American hopes and aspirations,
but it was grounded on an exaggerated idea of the value of American trade
to France and other nations. The American principles were stated in the
preamble to the commercial treaty of 1778. The French, however, were not
willing to grant national treatment; the Americans had to settle for
most-favored-nation treatment in the "King's European
dominions" and admission to established free ports in the French
colonies. French Foreign Minister Charles Gravier, Comte de Vergennes, did
add a special proviso that created the conditional version of the
most-favored-nation clause. Accordingly, if either party to the treaty
granted a special commercial favor to a third party, this favor would not
be granted automatically to the other signatory; an equivalent
compensation would be required if the third party had paid a price. The
historian Vernon Setser has argued that Vergennes added the proviso to
demonstrate to the world that France was not demanding special privileges
from the United States. This interpretation of reciprocity was added to
the treaty without much discussion or analysis.

The negotiations of the French commercial treaty clearly revealed the
impact of external circumstances on the American concept of
"perfect reciprocity." In addition, they also indicated the
role of internal political and economic factors in modifying the use of
reciprocity. The original draft contained a reciprocal prohibition on
certain export duties; the French would drop export duties on molasses
shipped from the West Indies to the United States, and the latter would
drop such duties on all domestic products sent to the French islands. A
majority of Congress opposed this article, and it was suppressed. This
incident was a mild foretaste of future domestic battles over the nature
and use of reciprocity.

An independent United States faced an international system in which all
the major participants followed restrictive, monopolistic policies. The
anticipated trade bonanza did not materialize, and the nation was now cut
off from almost all of the formerly lucrative West Indian trade. The
closing of the British islands was especially painful. In 1782, John Adams
negotiated a commercial treaty with the Netherlands, but the Dutch would
agree only to a most-favored-nation clause and not to reciprocal national
treatment. The conditional clause was omitted, because its utility had not
yet been recognized.

The policymakers of the Confederation government began to realize that
their nation's economic and political position allowed it almost no
bargaining power. As minister to France, Jefferson realized that the
most-favored-nation principle worked to the disadvantage of the nation
with the most liberal system. In practice, French traders had almost the
same rights in the United States as natives, since the United States had
very few restrictions on trade. In contrast, the French controlled the
entry of goods, even into free ports, by subjecting trade to the
monopolistic control of the Farmers General. This group fixed the quantity
and price of goods admitted. The most-favored-nation principle only
granted the United States equal discrimination. In 1785, Jefferson
launched an attack on the French monopolies with the assistance of the
Marquis de Lafayette, but the results were very limited. Indeed, as
Representative Elbridge Gerry of Massachusetts noted, under existing
circumstances the most-favored-nation principle was a system of
"cobwebs to catch flies."

Jefferson realized that in a world of monopolies, the United States had
few favors to grant because it had a relatively open economic system. In
such a world, commercial restrictions obviously meant bargaining power.
During the 1780s, Congress devoted considerable attention to this dilemma,
and to the lack of congressional power to enact navigation laws and
regulate trade. A special committee reported in 1784: "It will
certainly be admitted that unless the United States can act as a nation
and be regarded as such by foreign powers, and unless Congress for this
purpose shall be vested with powers competent to the protection of
commerce, they can never command reciprocal advantages in trade; and
without such reciprocity, our foreign commerce must decline and eventually
be annihilated."

In the spring of 1785 another committee studied these problems, and its
recommendations marked a distinct modification in the concept of perfect
reciprocity. The committee noted that without authority to impose
restrictions, "reciprocity means nothing and foreign powers may
follow what policy they please." It also recommended that treaties
were not needed with nations that had no colonies, since the United States
must consider giving special advantages in return for some trading rights
in the West Indies (and the most-favored-nation principle would prohibit
such special advantages).

Various proposals were made during the 1780s to amend the Articles of
Confederation or to request the states to provide Congress with more
power. The states could not agree, however, and nothing happened. Some
states did impose commercial restrictions on their own; but the effect was
limited because several states, including Connecticut, took advantage of
the restrictions of others by acting as a free entrepôt.

During negotiations with the British in October 1782, Congress formally
recognized the use of the conditional most-favored-nation principle as a
bargaining device. The draft commercial treaty provided for the reciprocal
free navigation of all rivers, lakes, and harbors. Congress insisted that
a conditional most-favored-nation clause be added so that other nations
would have to "pur-chase them [navigation privileges] by a
reciprocal grant." The negotiations for a commercial treaty were
dropped, however, when the British issued an order in council closing the
West Indies to American ships.

By 1787 a number of American leaders generally agreed that the United
States could not obtain any effective degree of reciprocity without a
national government possessing the power to regulate commerce both
externally and internally. This sentiment was part of the movement for a
constitutional convention, and the document produced at Philadelphia
reflected the congressional debates of the Confederation government. The
new Constitution provided much of the power that the advocates of
commercial diplomacy had demanded; the international scene had not
changed, however, and, internally, sectional and group interests provided
a continuing debate over the exact use of the power.

Generally, the debate took place between two groups. One was led by
Alexander Hamilton (secretary of the Treasury) and George Washington, the
other by James Madison (a U.S. representative) and Thomas Jefferson
(secretary of state until 1793). All of these men agreed that perfect
reciprocity was not possible in the world of the late eighteenth century,
and that as a result some important modifications would have to be made in
the practical uses of reciprocity. They also had retreated from the dreams
of a world thirsting for American trade. Most of them still retained some
hope that eventually the policies of the United States might lead to an
open world of unrestricted trade, but in the interim their main concern
was what immediate steps could be taken to ensure the prosperity and
independence of the nation. The two groups disagreed significantly not
over basic principles, but over tactics and the interpretation of primary
interests.

Madison and Jefferson believed that a considerable degree of economic
independence could be obtained immediately through a modified system of
exclusive reciprocity. They wanted to break the British monopoly on
American trade by enacting a navigation law that would favor continental
nations and encourage bargaining through discriminatory duties and dues
that would affect nations discriminating against the United States.
Jefferson explained the need for discrimination in his final report as
secretary of state in December 1793. He began by extolling the
physiocratic ideals of open trade as the best course for human happiness,
then added:

But should any nation contrary to our wishes suppose it may better find
its advantage by continuing its system of prohibitions, duties, and
regulations, it behooves us to protect our citizens, their commerce, and
navigation, by counter prohibitions, duties, and regulations, also. Free
commerce and navigation are not to be given in exchange for restrictions
and vexations, nor are they likely to produce a relaxation of them.

Jefferson hoped that an initial policy of exclusive reciprocity would
eventually produce a system of open trade.

Hamilton considered such a retaliation policy to be a declaration of
commercial war against Britain. He was convinced that in the short run the
United States should accept economic subordination and British
restrictions because import duties, largely derived from trade with
Britain, were vital to the economic development of the country. His goal
was economic independence through the development of domestic industry.
Hamilton and Washington opposed any measures designed to force reciprocity
and proclaimed a simple policy of equal treatment for all nations. Thus,
they hoped to buy time and not be drawn into European controversies.

The first congressional battle over commercial policy continued from 1789
to 1795. In July and August 1789, Congress passed four acts that laid the
foundation for a new commercial system. These were the Tariff of 1789, the
Tonnage Act, the act to regulate the collection of duties, and the act for
registering and clearing vessels. They provided protection for American
industry and shipping but did not discriminate against any foreign country
in particular. All foreign vessels were required to pay fifty cents per
ton, in comparison with six cents for American ships. A 10 percent
discount on customs duties was provided on dutiable goods imported in
American ships, a provision changed in 1790, after which merchandise
imported in American ships paid the normal duty and a 10 percent surcharge
was added to all goods imported in foreign ships. Madison had attempted to
add further discriminatory tonnage dues for nations that had not
negotiated commercial agreements with the United States. He was not
successful then, or in his subsequent efforts to enact retaliatory
measures, such as closing American ports to vessels that came from ports
closed to American ships.

Jay's Treaty (1794) settled several outstanding questions between
the United States and Britain and provided for some reciprocity. Trade
with the British Isles was opened on a most-favored-nation basis, and
provisions were made for reciprocal trade across the Canadian border. The
West Indies remained closed, however, because the Senate rejected the
clause providing for a very limited access and a prohibition on exports of
certain agricultural products from the United States. Opponents of the
treaty claimed that a policy of exclusive reciprocity would have done more
to break down the restrictive systems. In his Farewell Address, however,
Washington defended the noncoercive method of obtaining reciprocity, which
he characterized as "consulting the natural course of things;
diffusing and diversifying by gentle means the streams of commerce, but
forcing nothing."

Between 1796 and 1815, American leaders did very little about reciprocity.
The wars in Europe generally stimulated exports and led to the relaxation
of restrictions (especially in the West Indies). Questions of neutral
rights and impressment took precedence over matters that appeared less
urgent. In fact, Congress refused to act on a reciprocity bill, proposed
in 1802, that would have allowed, for any nation that would reciprocate by
repealing its similar legislation, the abolition of the discriminatory
tonnage dues on ships and the customs surcharges on the produce of the
country owning the vessel. Rufus King had negotiated such an arrangement
with Britain, and a bill providing for repeal had even been rushed through
Parliament.

In 1815 the United States government, in a burst of nationalistic vigor,
launched an attack on the restrictive systems of the European states.
American leaders were determined to open the world to U.S. shipping and to
make reciprocity an effective tool in breaking down the "excluding
and exclusive" policy of the old colonial order. The first step was
the passage of the Reciprocity Act of 1815. This was the proposal that had
been rejected in 1802, and it affected only the direct trade between
countries. Several months later, the United States and Great Britain
signed a convention that reciprocally abolished all discriminatory duties
and dues levied on ships and goods in the direct trade. (This convention
was still in force in 2001.) In April 1818, Congress passed a special
reciprocity act providing that discriminating duties on goods shipped from
the Netherlands would be dropped, not only for goods produced by the Dutch
but also for "such produce and manufactures as can only be or most
usually are first shipped from a port or place" in the Netherlands.
According to this broader principle, national treatment would be accorded
all goods that a country normally exported even if they were not produced
within that country. In January 1824, Congress extended this principle to
Prussia, the Hanseatic cities of Bremen and Hamburg, Sardinia, the dukedom
of Oldenburg, and Russia.

In his annual message in December 1825, President John Quincy Adams
recommended that the rule of complete reciprocity be adopted, and that all
discriminatory duties and dues be dropped for those countries that would
do the same for the United States. The origin of goods no longer would be
a factor. In the same month Secretary of State Henry Clay negotiated a
treaty of complete reciprocity with the Central American Federation. He
considered this to be a model treaty and later wrote, "All the
shackles which the selfishness or contracted policy of nations had
contrived, are broken and destroyed by this broad principle of universal
liberality."

By the Marine Reciprocity Act of 1828, Congress gave the president power
to proclaim complete reciprocity with all reciprocating nations. In the
next few years, this principle was embodied in more than thirty commercial
treaties negotiated by the United States. In 1830, Congress repealed the
tonnage dues on American ships and offered the same concession to the
vessels of any nation that would extend such treatment to American ships.

The attempt to apply reciprocity to the West Indian trade proved to be
more difficult. Congress utilized retaliation against the British in the
Navigation Acts of 1818 and 1820. The first closed all American ports to
British ships that came from ports closed to the United States. The second
applied the closing to British ships coming from any colonial port in
America, and prohibited the importation of goods from British colonial
ports, even in American ships, unless the goods came directly from the
producing colony. The latter provision was designed to block the
circuitous trade through Bermuda, Nova Scotia, and New Brunswick. The
British Parliament offered a liberalization of the West Indies trade in
1822, and the United States relaxed its restrictions by presidential
proclamation and by an act of Congress in March 1823. President Adams did
not respond to subsequent British offers of relaxation, but President
Andrew Jackson accepted these in 1830. As a result, reciprocal trade
relations between the United States and the British West Indies (with some
exceptions) were established. Negotiations with France and Sweden
concerning their West Indian colonies led to reciprocal agreements in 1828
and 1837. The Spanish colonies of Cuba and Puerto Rico had been closed
officially, but the regulations were not enforced. In 1830, Spain accepted
a United States consul for Cuba, and trade between the United States and
Cuba increased.

Official U.S. attitudes and policies toward the newly independent nations
of Latin America were part of the same ideological structure that produced
the reciprocity system. John Quincy Adams stressed this in 1822 when he
informed Stratford Canning, the British minister to Washington, that the
"liberation of the Spanish colonies would mean the end of exclusive
commercial policies everywhere." The Latin American policy of the
Monroe and Adams administrations was aimed at establishing reciprocity as
a key element in inter-American relations, and preventing the
reestablishment of the old colonial order of economic mercantilism and
political authoritarianism. In May 1823, Secretary of State Adams stressed
the U.S. policy "to counteract the efforts which it cannot be
doubted European negotiations will continue to make in the furtherance of
their monarchical and monopolizing contemplations." In regard to
Latin America he noted, "The only object which we shall have much
at heart in the negotiation [on commercial relations] will be the sanction
by solemn compact of the broad and liberal principle of independence,
equal favors, and reciprocity." In addition, Adams hoped that the
principle of complete national treatment of foreigners would be
established in the hemisphere, and that all discriminating duties would be
abolished.

To Adams and Monroe, the open world was to be established first in the
Western Hemisphere. And the Monroe Doctrine was, in part, a general
declaration of these aspirations. Commercial freedom was an important part
of the American rivalry with the European system, but the authors of the
Monroe Doctrine envisioned the "American system" in a
broader sense. As Adams pointed out in his policy statement of May 1823:
"Civil, political, commercial, and religious liberty, are but the
various modifications of one great principle, founded in the unalienable
rights of human nature, and before the universal application of which the
colonial domination of Europe over the American hemisphere has
fallen."

During the 1820s and subsequently, the gap between power and aspirations
would limit the efforts of the United States. During the 1820s, treaties
embodying commercial reciprocity were negotiated with Colombia and Brazil,
but economic liberalism in the hemisphere would not become a widespread
reality for more than a century. Adams and Monroe did, however, proclaim
the integral nature of reciprocity, the open world, and a Western
Hemisphere independent of the European colonial system.